Franchises in Colombia: assessing mandatory technology

Buying a franchise can also mean relying on point-of-sale, inventory, booking or ordering software chosen by another company. Before committing your investment, check how much these systems cost, who controls access and how the business will operate if they become unavailable. Across a franchise network, shared technology can make operations easier, but responsibilities must be clear.

1. Identify what technology you are actually buying

Do not assume that the initial franchise fee includes every system you need. Ask for a list of mandatory tools, distinguishing between hardware, software licences, installation, configuration and ongoing services. A sales demonstration is no substitute for this breakdown.

For each tool, request written answers covering:

• Function: which process it supports and whether it is essential for making sales.
• Provider: who supplies the service and who enters into the contract with you.
• Access: how many users are included and what permissions you will have as the franchisee.
• Dependencies: what connectivity, hardware or additional software it requires.
• Availability: when it will be ready to use and what testing will take place before you accept it.

Ask for a demonstration that follows a complete transaction: recording a sale, amending it, processing a refund, updating stock and generating the corresponding report. This can reveal manual tasks that were not apparent in the initial presentation.

If the franchisor contracts for the platform and then gives you an account, clarify what rights you will have in relation to the provider. Paying for the service does not necessarily make you the provider’s direct contractual customer.

2. Calculate the cost over the full contract term

An advertised monthly fee may represent only part of the expense. Prepare a separate technology budget covering upfront, recurring and usage-based costs. The aim is not to recalculate the entire investment, but to ensure that the cost of an essential operational dependency is not overlooked.

Where applicable, include installation, data migration, per-user licences, additional terminals, storage, maintenance, integrations and out-of-hours support. Also ask whether there are transaction fees or charges for exceeding particular usage thresholds.

Ask how each fee can be adjusted. It should be clear who can change it, how much notice they must give and what formula or criteria they will use. If pricing depends on a third party, ask how changes will be communicated and what options you will have if an increase threatens the viability of your outlet.

Also check who pays for a compulsory migration. Changing platforms may require training, file conversion and operational downtime. Negotiate how this work will be budgeted for and who will authorise it; do not focus solely on the price of the new licence.

3. Put responsibilities in the contract

In Colombia, a franchise agreement is an ‘atypical’ contract: there is no comprehensive, franchise-specific legal framework defining all its terms. The general rules on commercial contracts in Colombia’s Commercial Code apply, alongside relevant civil law provisions where appropriate. Freedom of contract does not remove legal duties, including the duty to act in good faith.

Nor is there a general, franchise-specific obligation to provide a franchise disclosure document within a uniform statutory timeframe. The draft decree published by the Ministry of Commerce, Industry and Tourism in 2021 should not be confused with legislation in force. You should therefore request the technology documentation before signing and expressly agree the relevant terms.

The contract, or a document expressly incorporated into it, should specify:

• Which services each party must provide.
• Who receives and handles incident reports.
• The response times promised, clearly distinguished from resolution times.
• What scheduled maintenance may interrupt the service and how notice will be given.
• What measures apply in the event of repeated failures, as agreed between the parties.

Avoid accepting an obligation to use a platform exclusively without identifying who is responsible for keeping it available. These commitments are matters for negotiation, not automatic rights attached to every franchise.

4. Check business continuity and access to your records

Put forward a specific scenario: the platform stops working during a busy trading day. Can you continue serving customers? How will you record transactions and enter them into the system afterwards? Ask for a procedure that complies with the business’s legal obligations; a manual workaround cannot always replace legally required systems.

Also clarify how often backups are made, who checks that they can be restored and how you will access your accounting and operational records. Do not confuse access to information with unrestricted permission to use personal data: its processing must comply with Colombia’s Law 1581 of 2012 and its implementing regulations.

Finally, agree a mechanism for exporting records that you are legitimately required to retain, with a defined format, timeframe and cost, including if the provider changes or the contractual relationship ends.

Practical conclusion: before signing, insist on a technology inventory, a complete budget and verifiable business continuity commitments. If you cannot explain how you will make sales, how much you will pay and how you will retrieve your records, there are still terms to clarify.